New tax plan gets nod

April 4, 2013

Faced with the choice of cutting services or imposing new taxes, Cape Coral City Council voted 6-2 Wednesday to move ahead with a new set of fees that will cost the average homeowner about $150 per year.

The council agreed to move forward with a 10 percent public service tax on utilities and a fire services tax, a type of annual assessment.

The ordinance to implement the public service tax at 10 percent, the maximum allowed, will be introduced April 29.

The amount of the fire services levy, and a related decrease in the property tax rate so the overall impact on the "average" Cape property owner will not exceed $150, will be determined after the city updates a cost study done a few years ago.

For Councilmember Kevin McGrail, the vote was a victory for the city, which will now have the funds to give long-neglected city problems attention.

"This will allow our city to be sustainable, and able to address the Capital Improvement Program (CIP)," McGrail said. "For three and a half years, I have had to tell my constituents 'we have no money.'"

During public comment, numerous people stood up and expressed concern that without financial diversification, programs like Special Populations would be cut.

Council said it would not let that happen.

"Before we cut Special Populations, we're going to cut a whole lot more," Councilmember Chris Chulakes-Leetz said. "Before government takes out their budget constraints on those less fortunate, they'll have to go through me."

Before the presentation, City Manager John Szerlag asked council if it was ready to tackle the subject, and that if it wasn't, the city had to be prepared to downscale, meaning it would have to divest itself of SunSplash, cut 232 full-time city and 500 contract jobs and possible lose its Special Populations Program, described as a winner for the city.

"Other cities deal with Special Pops with soup kitchens and homeless shelters," McGrail said. "Getting rid of SunSplash and other things is just a blip on the screen."

Mike Burton of Burton & Associates came to the podium and demonstrated on his computer program what the city faced without financial diversification, the development of revenue sources other than property taxes.

The picture painted wasn't pretty.

By 2015 city financial reserves would be in the negative and would only get worse.

"It shows the depths of issues you're dealing with," Burton said.

As he plugged in the numbers for public service taxes and the fire services fees, the numbers improved tremendously, with budget sustainability, the continuation of services and a small earmark for reserves.

Council members spend the greater part of the next hours handing Burton different scenarios and what they would mean to the city.

Chulakes-Leetz seemed impressed and ready to vote for diversification, but was against a public service tax, saying it would impose taxes on lower-income individuals, opting instead for a scenario that focused on the fire services tax.

When the final motion was made, with the 10 percent public service tax in it, he said he wouldn't support it.

"Those who have unimproved properties don't take part in utilities taxes. We're carrying wealthy people and taking money out of the city when property increases in value," Chulakes-Leetz said. "They should pay to keep Cape Coral attractive."

Mayor John Sullivan joined him on the dissenting side.

The vote will allow the city to move forward with capital and infrastructure improvements, Szerlag said.

"I'm glad to council chose that path. We have neglected capital since 2007 and we can't do that any longer," Szerlag said. "We had to do that at the expense of dismantling the operational side of the organization. It would have caused us to become a blighted community."